CSR: Investing in the next generation of lawyers and engaging with the community

Boodle Hatfield takes great pride in its CSR efforts and, in particular, its commitment to education and investing in the community. In recent years, the firm has engaged with local schools, including working with St Thomas the Apostle College in Peckham, where pupils have been invited to the firm to take part in debates, Q&A sessions on careers in the law and tours of the offices to meet lawyers and other business professionals.

Just over two years ago, David Odejide came to Boodle Hatfield as part of the school group from St Thomas the Apostle College, and this summer he took the initiative to get back in touch with us to seek work experience and has spent the last week in our Property and Corporate teams. Now studying Economics, English Literature, Philosophy and Ethics for A Level, David has his mind set on studying Law at university. In his time working in the Corporate department at Boodle Hatfield, David put together a case study on a recent business sale, including points to consider when buying or selling a business. Find out what he had to say below…

Case Study: The sale of off shore marine survey company Gardline to Royal Boskalis Westminster for £40 million

Background:

Gardline is a family business that has been operating since 1969 and is a specialist in marine geophysical and environmental surveys and offshore geotechnical services.

It operates 15 survey-related vessels and 25 smaller craft. According to the company accounts filed at Companies House, in the year ending April 2016 Gardline had a turnover of almost £115m, down from just over £210.5m the year before. Additionally, the accounts show it had an average of 1,221 employees, down from 1,729 in the year to the end of April 2015.

A Dutch dredging company called Royal Boskalis Westminster has purchased Gardline for £40m. The deal completed on 15 August 2017. As new owners of the marine service company, Boskalis can now offer specialist subsea geotechnical surveys to the renewables and early cyclical oil and gas markets.

What are the considerations when selling or buying a business?

Selling:

First determine whether selling your business will achieve your objective, both financial and otherwise.

These are the 4 main ways to sell your business:1. A trade sale / management buyout 2. Partial sale to a private equity house, for example with a long performance based earn out for the Seller.3. Flotation on the stock market4. Entering into a Joint Venture

Timing is important when selling your business. It would be most advantageous to sell your business when a bubble in that sector has led to high valuations, as the business would be valued at a higher amount. It is also beneficial to sell your business at an advantageous point in the economic cycle.

It is worth noting that the sale of a business often distracts the management of the business, which may adversely impact future sales and profitability.

Before selling your business, you must improve the value and appeal of your business. This means that you must maximise profits and minimalize costs. This pre-sale transition process typically takes a few months to complete.

Select a suitable advisor as they may have superior knowledge on potential purchasers and have essential negotiation skills. Before choosing an advisor make sure they do not have a conflict of interest (e.g. a potential buyer has been a client of the advisor before).

Buying:

When purchasing a business, the buyer must consider the liabilities that are linked with the business (e.g. environmental issues), as it will become an issue for the buyer once in possession of the business.

If the target business is part of a larger corporate group, it may share assets. The buyer has to consider whether arrangements can be overturned without disruption to the target business.

The buyer must keep in mind that a binding deal can be made through conversation. When talking or writing make sure the seller is aware that nothing is legally binding until the formal acquisition agreement has been signed

If the seller is untruthful about disclosures and warranties, the buyer will have a claim, either for damages or in the case of a misrepresentation it may rescind the contract.

Signing of the acquisition agreement and completion of the transaction are often simultaneous. However, a gap may be sometimes necessary because of things such as getting approval from the competition authorities and consulting with employees prior to their transfer.

If there is an interval between signing and completion, additional issues such as who bears the risk of an adverse event in relation to the target business will need to be carefully addressed.

During the acquisition, the buyer is recommended to prepare a detailed integration plan to implement upon completion. Poor integration planning is often the most common reason for an acquisition to fail.